Sumitomo Dainippon Pharma Co Ltd announce today that we have executed a collaboration and license agreement for worldwide joint development and commercialization of the following four novel candidate compounds (hereinafter referred to as the "four compounds") currently under development in psychiatry and neurology area by Sumitomo Dainippon Pharma and Sunovion.

Under the terms and conditions of this agreement, Sunovion grants Otsuka rights to jointly develop and commercialize the four compounds worldwide. The Sumitomo Dainippon Pharma Group (Sumitomo Dainippon Pharma, Sunovion, Sumitomo Pharmaceuticals (Suzhou) Co., Ltd., and Sumitomo Pharmaceuticals Asia Pacific Pte. Ltd.) and Otsuka will pursue joint development of these compounds. With regard to commercialization, the Sumitomo Dainippon Pharma Group will record sales in the following each country and region: the United States, Canada, Japan and Asia (China, Taiwan, Singapore, Thailand, Vietnam, and Malaysia) and, the Sumitomo Dainippon Pharma Group and Otsuka plan to co-promote the four compounds jointly in principle. In addition, Otsuka will record sales in 41 other countries and regions including countries in Europe. (The parties will discuss other regions in the future.)

Sunovion and Otsuka will share expenses and profits involved in clinical studies, applications for approval, and commercialization in each of these countries and regions under the agreement. Additional indications for ulotaront and indications for SEP-378614 and SEP-380135 will be determined after future consultations between the Sumitomo Dainippon Pharma Group and Otsuka.

Upon the completion of this agreement, Otsuka will pay Sunovion a lump-sum upfront payment of USD 270 million (approximately JPY 30 billion). In the future, Otsuka will make development milestone payments for the four compounds of USD 620 million (approximately JPY 69 billion), and potentially more depending on the number of additional indications obtained for them. Potentially, sales milestone payments will also be made by Otsuka.

"We are pleased to have signed this agreement with Otsuka, which has wide global reach and significant neuropsychiatry expertise. We will work together to more rapidly and reliably develop and commercialize valuable pharmaceuticals for more patients around the world with the expectation that these new medications will grow," said Hiroshi Nomura, president and CEO of Sumitomo Dainippon Pharma. "Sumitomo Dainippon Pharma aims to achieve sustained growth through global collaboration in anticipation of the loss of the atypical antipsychotic agent Latuda^®'s exclusivity in the United States and other future changes in the business environment. This collaboration is a major step forward in this initiative."

"Otsuka has been committed to providing new antipsychotics that contribute to patients worldwide in the field of neuropsychiatry by leveraging internal capabilities and external collaborations, starting with the launch of antipsychotics in the United States in 2002," said Makoto Inoue, president and representative director of Otsuka. "We are advancing in new areas such as the development of drugs to treat agitation associated with dementia of the Alzheimer's type and the deployment of the world's first digital medicine. Through this agreement, we are confident the companies will be able to deliver even more value to patients through the experience and networks that we have cultivated over many years worldwide."

Sumitomo Dainippon Pharma plans to post the lump-sum upfront payment as revenue in its consolidated financial results for the second quarter of the fiscal year ending March 31, 2022 and has already factored it into the financial forecast for this fiscal year.